News Column

Driving Change on the Car Lot

Ford hopes to increase its ranks of Hispanic auto dealers through an innovative new partnership.

By Tim Dougherty
HISPANIC BUSINESS« magazine
March 2002


In 1995, Ramon Alvarez had dreams of owning a Ford dealership but lacked the capital to make them a reality. So he turned to Ford and its dealer development program.

Through the program, Mr. Alvarez was able to get a loan for 90 percent of the purchase price of a dealership as well as help finding a suitable location. Today Alvarez Lincoln- Mercury, Mr. Alvarez's dealership in Riverside, California, is so successful -- it was ranked 155 on last year's HISPANIC BUSINESS 500 with 2000 revenues of $25.98 million -- that he recently saw fit to add a Jaguar franchise. (Jaguar is a division of Ford.)

"I've been successful because of the Ford program," says Mr. Alvarez. "Ford will do everything it can to help you make money, to make you profitable, because the company won't make money if you don't."

Ford hopes that its recently augmented partnership with the National Association of Minority Automotive Dealers (NAMAD), economic development organization Latino Initiatives for the Next Century (LINC), and venture capital firm Millennium will yield many more such success stories.

Known as FLMNP, the partnership seeks to increase the number of Hispanic-owned Ford dealerships by building on the carmakerí»s existing dealership development program. Under FLMNP, participants can contribute significantly less toward the purchase of a dealership than the 10 percent required under the old program. Like its predecessor, the new program also provides for training and other support.

"We are going to take the next few months to implement this program on a beta test basis, and then we plan to take this model nationally into all ethnic markets," Sheila Vaden-Williams, president of NAMAD, said in announcing FLMNP.

The need for such programs is obvious. Of Ford's 5,146 dealerships nationwide, only 82 are Hispanic-owned. According to the U.S. Hispanic Chamber of Commerce, Hispanics own just 381, or about 1.5 percent, of the country's full complement of 26,000 foreign and domestic automobile dealerships.

FLMNP actually dates to last June, when Ford, LINC, and Millennium announced a partnership to increase the number of Hispanic- owned Ford dealerships. At the time, the stated goal was 50 new Hispanic dealerships over the subsequent five years. With NAMAD's participation, which was announced in January, the program was dubbed FLMNP.

Activists hope the program will help the industry meet NAMAD's recently announced goal of 15 percent minority ownership of U.S. manufacturer retail outlets.

"A critical factor that we as an industry must address in meeting this challenge is to ensure that we have built the appropriate infrastructure to support this ground-breaking goal," NAMAD chairman Steve Harrell said in a prepared statement. "The first step we must take is to ensure that ethnic minorities have access to affordable capital. The automotive industry is extremely capital-intensive. As viable opportunities are becoming more expensive, we felt compelled to find alternative sources of financing."

Through the new program, prospective Hispanic dealers will be able to borrow upwards of four-fifths of the initial investment required (10 percent of a dealership's purchase price) under Ford's original dealer development program, according to company officials.

FLMNP representatives are quick to point out that their program is not for beginners. Candidates must have a minimum of five years' dealership experience and two years' managerial experience. The selection process includes interviews and background checks.

Joseph Arredondo, the program's first beneficiary, has more than 15 years of car dealership experience. Similarly, Riverside's Mr. Alvarez owned three used cardealerships in San Diego before getting his current operation through Ford's dealer development program.



U.S. Hispanic Auto Dealers

Manufacturer

No. of dealers*

Audi

0

BMW

10

Daimler/Chrysler

42

Ford

82

GM

122

Honda

8

Hyundai

24

Jaguar

3

Kia

19

Mazda

6

Mercedes

0

Mitsubishi

9

Nissan

16

Porsche

2

Subaru

9

Toyota (Lexus)

14

Volkswagen

10

Volvo

4

*As reported by manufacturers, July 2000
Mr. Alvarez is a member of the Ford Motor Minority Dealers Association, which hosts regional events and generally advocates for greater minority representation among Ford dealership owners.

For all of Ford's high-profile outreach efforts, its stable of Hispanic dealers has increased by just five in the last year, according to Osvaldo Garcia, diversity strategy manager for minority dealer development at Ford. He says the total reflects sales and consolidations involving existing Hispanic-owned dealerships as well as the opening of new ones.

"You have to remember, these are privately, independently owned businesses, and if the owners want to sell them there is nothing Ford can do about it," he says.



Source: HISPANIC BUSINESS magazine


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